Diabetes is a disease that affects the blood vessels. Small blood vessels are affected first and they start to become leaky. As a result, diabetics get swelling in their extremities and must check their feet for sores/infection due to poor circulation.
It just so happens that some of the smallest blood vessels in the body are found in the eye and these vessels can easily be observed with a dilated eye exam. Consequently, we can get an overall idea of how well your blood sugar is being controlled in your entire body by dilating your eyes.
Additionally, uncontrolled diabetes can lead to retinopathy and blindness, so yearly (or more frequent if necessary) dilated eye exams are the best way to keep your eyes healthy and happy!